“You had three consecutive down weeks and investors are weighing up where to go from here,” said Michael Hewson, senior market analyst at CMC Markets in London.

“Based on fundamentals, there is really very little further upside. The market was overvalued two to three weeks ago and I still think we’re overvalued. But if you think central banks will continue to ease, there is more potential,” he said.

In May, global stock markets jumped to multiyear highs, as aggressive easing from central banks largely offset worries about global growth. Markets started to pull back, however, on concerns the U.S. Federal Reserve may soon begin to taper its massive bond purchases.

“Clearly such figures are a sharp reminder that China is still struggling to recover from the global economic downturn and there is still a way to go before investors’ confidence in the economic giant returns,” said Shavaz Dhalla, a financial trader at Spreadex, in a note.

Miners are sensitive to growth indications from China, as the country is a major consumer of natural resources.

Reuters

A set of poor economic data from China weigh on miners in Europe on Monday.

Japan provides support

Sentiment in Europe, however, found some support in good news from Japan. The country’s gross-domestic-product growth for the first quarter was revised up to 4.1% annualized growth from the original estimate of 3.5%. On a quarterly basis, GDP rose 1% in the first three months of the year, better than the preliminary result of 0.9%.

Asian stock markets were also supported by the latest take on the U.S. labor-market recovery. On Friday, U.S. data showed that 175,000 jobs were added to the economy in May, beating market expectations. But the data still appeared weak enough for the Federal Reserve to continue its asset purchases at the current pace. Fed Chairman Ben Bernanke last month said the central bank could consider scaling back its easing program this summer if data continue to improve.

“I don’t think the Fed will taper this year, but the fact that they are talking about it is making investors think twice before jumping in with both feet,” Hewson said.

“They [the Fed] want to taper QE, but the data is not allowing them the flexibility to do so. There may come a point where QE just isn’t working anymore. It’s like a drug—you get to a point where it doesn’t work anymore because the body is getting used to it,” he added.

In London, shares of Severn Trent PLC
SVT, +2.06%
slumped 6% after a multinational consortium of funds said it will make no further offers for the utility firm after its latest bid was rejected. The consortium on Friday raised its offer for Severn Trent, in its third attempt in less than a month to take the company private.

France’s CAC 40 index
PX1, +1.13%
lost 0.2% to 3,864.36, with shares of France Télécom
FR:FTE
down 1.7%. France Télécom’s shareholders have voted to change the company’s name to Orange, its well-known brand, on July 1.

Media reports said the company’s chief executive, Stephane Richard, has been held for questioning in France in relation to his alleged role in a controversial payout to French businessman Bernard Tapie in 2008. A spokesperson from Orange confirmed that Richard had been detained, but said it is not an issue regarding his future at the company.

Steelmaker ArcelorMittal SA
MT, +1.06%
lost 1% after Moody’s Investors Service said the outlook for the European steel industry will remain negative over the next 12 to 18 months.

Outside the major indexes, shares of Nordea Bank AB
NDASEK, +0.43%
fell 1.6% after Goldman Sachs cut the firm to neutral from buy following its recent rally.

Zurich Insurance Group AG
ZURN, +0.13%
lost 1% after J.P. Morgan Cazenove cut the firm to underweight from neutral.

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